Wrapping up Q3 earnings, we look at the numbers and key takeaways for the property & casualty insurance stocks, including NMI Holdings (NASDAQ:NMIH) and its peers.
Property & Casualty (P&C) insurers protect individuals and businesses against financial loss from damage to property or from legal liability. This is a cyclical industry, and the sector benefits when there is 'hard market', characterized by strong premium rate increases that outpace loss and cost inflation, resulting in robust underwriting margins. The opposite is true in a 'soft market'. Interest rates also matter, as they determine the yields earned on fixed-income portfolios. On the other hand, P&C insurers face a major secular headwind from the increasing frequency and severity of catastrophe losses due to climate change. Furthermore, the liability side of the business is pressured by 'social inflation'—the trend of rising litigation costs and larger jury awards.
The 33 property & casualty insurance stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 3.8%.
In light of this news, share prices of the companies have held steady as they are up 2.1% on average since the latest earnings results.
NMI Holdings (NASDAQ:NMIH)
Founded in the aftermath of the 2008 housing crisis to bring new capacity to the mortgage insurance market, NMI Holdings (NASDAQ:NMIH) provides mortgage insurance that protects lenders against losses when homebuyers default on their mortgage loans.
NMI Holdings reported revenues of $178.7 million, up 7.6% year on year. This print exceeded analysts’ expectations by 0.7%. Despite the top-line beat, it was still a slower quarter for the company with EPS in line with analysts’ estimates.
Adam Pollitzer, President and Chief Executive Officer of National MI, said, “In the third quarter, we again delivered strong operating performance, consistent growth in our high-quality insured portfolio, and standout financial results. Our products and the support we provide are more important today than ever before, and we’re delivering unique solutions for our customers and their borrowers. We have built an exceptionally high-quality book covered by a comprehensive set of risk transfer solutions, our credit performance continues to stand ahead, and we have a robust balance sheet supported by the significant earnings power of our platform. Looking forward, we’re well positioned to continue delivering differentiated growth, returns and value for our shareholders.”
Interestingly, the stock is up 1.8% since reporting and currently trades at $38.21.
Is now the time to buy NMI Holdings? Access our full analysis of the earnings results here, it’s free for active Edge members.
Best Q3: Root (NASDAQ:ROOT)
Pioneering a data-driven approach that rewards good driving habits, Root (NASDAQ:ROOT) is a technology-driven auto insurance company that uses mobile apps to acquire customers and data science to price policies based on individual driving behavior.
Root reported revenues of $387.8 million, up 26.9% year on year, outperforming analysts’ expectations by 4.5%. The business had an incredible quarter with a beat of analysts’ EPS estimates and a solid beat of analysts’ net premiums earned estimates.
Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 13.1% since reporting. It currently trades at $77.80.
Is now the time to buy Root? Access our full analysis of the earnings results here, it’s free for active Edge members.
Weakest Q3: Selective Insurance Group (NASDAQ:SIGI)
Founded in 1926 during the early days of automobile insurance, Selective Insurance Group (NASDAQ:SIGI) is a property and casualty insurance company that sells commercial, personal, and excess and surplus lines insurance products through independent agents.
Selective Insurance Group reported revenues of $138.7 million, down 88.9% year on year, falling short of analysts’ expectations by 52.7%. It was a disappointing quarter as it posted a significant miss of analysts’ revenue and EPS estimates.
Selective Insurance Group delivered the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 3.9% since the results and currently trades at $78.05.
Read our full analysis of Selective Insurance Group’s results here.
Lemonade (NYSE:LMND)
Built on the principle of giving back unused premiums to charitable causes selected by policyholders, Lemonade (NYSE:LMND) is a technology-driven insurance company that offers homeowners, renters, pet, car, and life insurance through an AI-powered digital platform.
Lemonade reported revenues of $194.5 million, up 42.4% year on year. This print topped analysts’ expectations by 4.8%. It was a stunning quarter as it also produced a beat of analysts’ EPS estimates and an impressive beat of analysts’ revenue estimates.
The stock is up 24.9% since reporting and currently trades at $73.99.
Read our full, actionable report on Lemonade here, it’s free for active Edge members.
Assurant (NYSE:AIZ)
With roots dating back to 1892 when it was founded by a Civil War veteran, Assurant (NYSE:AIZ) provides specialized insurance products and services that protect major consumer purchases like mobile devices, vehicles, homes, and appliances.
Assurant reported revenues of $3.23 billion, up 8.9% year on year. This number beat analysts’ expectations by 1.5%. Overall, it was a stunning quarter as it also put up a beat of analysts’ EPS estimates and a solid beat of analysts’ net premiums earned estimates.
The stock is up 3.6% since reporting and currently trades at $222.39.
Read our full, actionable report on Assurant here, it’s free for active Edge members.
Market Update
Thanks to the Fed’s series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% in November), and a notable surge followed Donald Trump’s presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by potential trade policy changes and corporate tax discussions, which could impact business confidence and growth. The path forward holds both optimism and caution as new policies take shape.
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